Morningstar Equity

Morningstar
Recommendation: AccumulateGareth James, Morningstar
Analyst - 02 9276 4583Origin Energy's
purchase of the Eraring coal fired power station in New
South Wales comes as little surprise and has no impact on
our AUD 14 per share fair value estimate. Our net profit
forecasts remain unchanged, however, the transaction results
in a AUD 250 million cash payment to Origin. The payment
helps liquidity, a key concern for some investors recently,
and makes rumoured equity issuance even less likely. Our
thesis is largely unchanged, but our view of the company
improves slightly with the additional flexibility of Eraring
and the improved liquidity position. The transaction is too
small to impact our medium fair value uncertainty rating or
the competitive positioning of the company. We maintain our
view that Origin has no sustainable competitive advantage,
or economic moat. The core energy markets business has few,
if any, advantages over competitors and we only expect
returns on invested capital to be around equal to the
weighted average cost of capital of 8.6%.

Seven Group
Holdings Limited SVW| Challenging Markets Result in
Restructuring for Seven Group's WesTrac
BusinessMorningstar Recommendation:
AccumulateRoss MacMillan, Morningstar Analyst - 02 9276 4450Seven Group announced the
implementation of an organisational restructure of WesTrac
Australia's NSW/ACT operations as a result of deteriorating
market conditions, particularly in the mining sector. The
restructure will involve significant redundancies, causing a
one-off charge of AUD 10 million. In February, former CEO
Peter Gammell forecast an increase in underlying net profit
after tax (NPAT) for fiscal 2013 of between 10% and 20%.
Seven Group has now indicated earnings will be at the lower
end of earlier guidance, which equates to underlying NPAT of
approximately AUD 377 million.

Amcor Limited AMC| China
Acquisition Increases Amcor's Exposure to a Rise in Consumer
SpendingMorningstar Recommendation:
ReduceNathan Zaia, Morningstar Analyst - 02 9276
4491Amcor's acquisition of Chinese flexible
packaging business Jiangsu Shenda Group for RMB 350 million
(AUD 62 million) builds on a successful strategy of
reinvesting strong cash flows from developed markets into
faster-growing emerging markets. We believe Amcor's global
research, development and technology, relationships with
multinationals and financial capacity puts it at an
advantage over smaller competitors, particularly in more
fragmented developing markets. This leaves Amcor well
positioned to capitalise on supportive fundamentals of
rising per-capita incomes, urbanisation and increased health
awareness, driving consumption and complexity of packaging
in Asia. Amcor also announced the sale of its retired mill
property in Australia for AUD 120 million. While we view the
strategic acquisition positively, the size of the
acquisition has no impact on our forecasts or AUD 9.00 fair
value estimate.

Precinct Properties New Zealand Limited
PCT-NZ| Cut to Borrowing Spreads Has Muted Impact on
Precinct's Borrowing CostsMorningstar
Recommendation: HoldTony Sherlock, Morningstar Analyst -
02 9276 4584 Precinct replaced its
existing unsecured NZD 635 million facility with a secured
facility of NZD 660 million. The existing banking syndicate
of ANZ Bank, Bank of New Zealand and Commonwealth Bank has
been expanded to include Bank of Toyko-Mitsubishi, taking a
NZD 50 million exposure. The new facility has tranches
expiring in July 2016, July 2017 and July 2018, increasing
weighted average debt tenure from three to four
years.

Caltex Australia Limited CTX| One Minute Caltex
Soaring, the Next a FallMorningstar
Recommendation: HoldMark Taylor, Morningstar Analyst -
02 9276 4478Caltex has guided half-year
replacement cost operating profit (RCOP) at AUD 160 to AUD
175 million, well below expectations. The company only just
reported first quarter profit of AUD 146 million, meaning
the second quarter declines by 80%-90%. As is the norm with
Caltex, most of the volatility pertains to the refining and
supply segment. But the marketing and distribution component
has not been completely immune either.

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